Speeding up tax justice

EDITORIAL: The decision to assign all tax and financial cases directly to the divisional benches of the Islamabad and Lahore High Courts is a welcome and overdue step. For years, taxpayers, the Federal Board of Revenue, and even successive governments have lamented the backlog of litigation tying up hundreds of billions of rupees in revenue.

The result has been prolonged uncertainty for businesses, delayed recoveries for the exchequer, and rising costs of doing business. By ensuring that tax disputes bypass single benches and intra-court appeals, the new system promises faster resolution and a clearer path to the Supreme Court when required.

The notifications issued by the Chief Justices of both high courts, in line with the decision of the National Judicial Policy Making Committee, harmonise procedure with the Sindh High Court’s practice. This uniformity is important. Businesses and advisers have long complained about inconsistent processes across jurisdictions, which only added to uncertainty. The removal of intra-court appeals, while limiting one avenue of review, should reduce repetitive delays and ensure quicker finality at the High Court level.

Tax advisers note that this change will also reduce costs for taxpayers. A drawn-out litigation cycle not only ties up working capital but also increases compliance and legal expenses, which ultimately discourage investment. A faster, more predictable judicial system is in itself an incentive to comply and invest, since businesses can make decisions with confidence about their exposure and liabilities. The revenue authority, too, will benefit from quicker access to revenue locked in disputes, improving its fiscal management and reducing reliance on stopgap borrowing.

However, for this reform to deliver its full potential, quality must accompany speed. Tax and financial law is highly specialised, and the quality of judgments will depend on the expertise of the benches. It is essential that lawyers and practitioners with experience in fiscal matters are elevated to the high courts, and that dedicated benches for tax issues are maintained. Two judges are indeed better than one only if they bring the necessary technical depth to complex disputes. Otherwise, the risk remains that cases will move faster through the system, but the quality of jurisprudence will not improve.

There is also a need to recognise that judicial reform, while critical, cannot substitute for clarity and consistency in the tax regime itself. Frequent amendments, overlapping jurisdictions, and weak enforcement have made litigation inevitable. While divisional benches can speed up disposal, the root cause – complexity and frequent changes in law – must also be addressed. Simplification, transparency, and predictability in fiscal policy will help reduce the flow of cases into the courts in the first place.

The new arrangement is nonetheless an important signal of intent. Harmonisation across high courts, elimination of redundant appeals, and an institutional mechanism to handle fiscal matters at a higher level should provide much-needed relief to businesses and taxpayers, and bolster the government’s revenue efforts. If combined with stronger expertise on the bench and dedicated tax courts, it could mark the beginning of a more efficient and reliable judicial process for fiscal disputes.

Speed and quality must go hand in hand. Only then will this reform deliver lasting dividends to taxpayers, investors, and the state alike.

Copyright Business Recorder, 2025